Change the performance management conversation

2013

Jackie Messersmith, President

Talent Management LLC

10/17/2013

Change the Performance Management Conversation

Change the Performance Management Conversation 1 © 2013 Talent Management LLC

Change the Performance Management Conversation

Redesigning employee performance management is no longer a nice to have, it’s imperative.

The days of organizations relying on cookie-cutter annual reviews or simple assessments are

long gone.

A more integrated, comprehensive and strategic approach is needed — one that includes

meaningful goal setting and plenty of development opportunities plus continuous monitoring,

feedback and rewards.

So how did we get where we are with performance reviews in the first place? Let’s start by

taking a look at the history of employee performance management.

In 1950, Congress passed the Performance Rating Act. The law was meant to establish a method

to rate federal employees. They were marked as one of three subjective levels: outstanding,

satisfactory or unsatisfactory. Private and public companies quickly followed suit, rating

employees and recording compensation and rewards based on those reviews. Companies

considered the performance review a way to protect themselves from potential legal squabbles.

That process hasn’t changed much if at all since then, though businesses and employees have.

Many experts agree that traditional performance management programs are like wallflowers.

They exist in the background, but are seldom effective at what they set out to achieve. In fact,

4 out of 5 U.S. workers are dissatisfied with their job performance reviews (Reuters)

46% of workers believe that performance reviews are not an accurate appraisal of

their work (Globoforce/SHRM)

30% of the performance reviews end up in decreased employee performance

(Psychological Bulletin)

So what can businesses do to overcome these perceptions and outcomes? Done well, employee

performance management offers an opportunity for companies to move beyond accountability

to accomplishment — to progress from mere performance reviews to increasing every

employee's contribution to the organization.

The first challenge is to disconnect pay increases from the performance management

conversation. Unfortunately, the performance review has become the vehicle for managers to

justify to employees their compensation which has already been set by powers beyond their

control.

Samuel Culbert, co-author of “Get Rid of the Performance Review! How Companies Can Stop

Intimidating, Start Managing — and Focus on What Really Matters!” and a professor at UCLA’s

Anderson School of Management, says pay actually distorts performance reviews.

“Pay is not determined by performance, despite the fiction companies like to perpetuate,” he

says. “Pay is determined by the economy, by a company’s bottom line, by the overall budget set


by those higher up. None of that has anything to do with how an individual performed in the

past year. In other words, the performance review doesn’t determine pay. Pay determines the

performance review.”

Next, we need to think differently about the purpose of a performance review. A performance

assessment should be a road map, something that connects employees’ potential, measured

through a validated competency assessment, with where they actually are now, where they

would like to go and what they’ve achieved.

“When we think about performance reviews, both employees and supervisors get a lump in

their throat as opposed to seeing it as an opportunity and saying, how do I grow in this

organization? Or as a manager, how can I make sure every employee on my team is doing his or

her best?” says Patrick Sweeney, president of Caliper Corp., a HR consulting firm.

Transform the System

As Deloitte’s 2013 Passion Report suggests, cultivate “workers with passion to realize extreme

sustained performance improvement.” What is worker passion? “Passion is when a person

discovers work that they love and when that work becomes more than just a mode of income.”

Based on their recent research, Deloitte states that, “While much work has been done to

understand and improve employee engagement, employee engagement is no longer enough.

Times have changed.”

The three attributes of worker passion, according to a Forbes article on the study, are “a

continuing commitment to accomplishment in a particular domain, a disposition to quest and

explore, and openness to connect with others.” Currently, only 11% of the U.S. workforce

embodies all three.

“Organizations should ask themselves if they reward or punish failure and assess how they

encourage, or discourage, workers to actively collaborate with the ecosystem on work projects.

Additionally, companies should consider how to provide workers with more visibility and clarity

into how each individual makes an impact on the company and the broader industry or

domain.” If all these efforts for building passionate employees seem unnecessary, John Hagel,

director of Deloitte, would have to disagree. “This transformation effort will be challenging, but

external pressures in the form of intensifying competition, mounting performance pressure and

continual disruptions will ultimately force companies to confront this imperative or die – the old

ways of doing business are simply proving less and less effective,” Hagel said in the Forbes

article.

Great Competencies = Great Results

Many people do not take performance reviews seriously because they are not measured or

rewarded for results, such as providing accurate and timely performance feedback to employees

and utilizing related skills such as inspiring teamwork and accountability. In addition, many of

the old methods of performance reviews are based on forms or templates used across multiple

roles which have little to nothing to do with specific roles, so they are not relevant. As a result,

organizations need to make a conscious effort to make performance reviews more meaningful.


In Jim Collins’ book Good to Great, he provided evidence from data captured over five years that

drew a correlation between five universal, distinguishing characteristics companies possessed,

and the fact that those same companies consistently produced great results.

Like companies, not all employees are created equal. For example, research shows that "A"

players outsell their peers by at least 48% in sales positions, have a more positive effect on

customers than other employees, and deliver superior team performance when included in a

work group. A small team of "A" players can run circles around a giant team of "B" and "C"

players. It’s also been found that these “A” players consistently use a common set of

competencies associated with their specific role.

There are two parts to being successful in one’s role. One is having the ability to master

competencies related to that role, as noted above. The other is ensuring those competencies

are put to work to achieve results. Quite often, because some companies don’t take the time to

set and/or track organizational goals, individual goals and expected results are not set or tracked

either, creating yet another gap in performance management systems.

Why are competencies important?

Competencies provide direction: Most fundamentally, competencies provide organizations with

a way to define what its employees need to do to produce the results the organization desires

and do so in a way that is consistent. Competencies provide the “North Star” by which

employees at all levels navigate in order to create synergy and produce more significant and

consistent results.

Competencies are measurable and can be developed: When properly defined, competencies

(and the impact they have on desired results) can be measured. This measurability enables

organizations to evaluate the extent to which their employees are demonstrating the behaviors

believed to be critical for success as well as to assess the business-relevant return on resources

invested to retain, attain or develop these competencies.

Competencies can be learned: A third reason is that competencies can be learned. This means

that once an organization determines the kind of competencies critical for each role, they can

enhance success by taking steps to develop the capability of their employees to exhibit these

competencies. Unlike personality traits, competencies are characteristics of individuals that are

more flexible so they can be developed and improved.

Competencies can distinguish and differentiate roles and the organization: Competencies

represent a behavioral dimension on which organizations can distinguish and differentiate roles

within the organization and the organization itself. By distinguishing and differentiating

competencies for each role, the stage is set for better succession and career planning. And,

while two organizations may be generally alike in the kinds of financial results they achieve (as

well as results related to their employees, customers, etc.) the way in which they accomplish

this can vary depending on the competencies that fit their particular strategy and culture.

Competencies can integrate performance management practices: Finally, competencies provide

a structured model that can be used to integrate performance management practices


throughout the organization. With competencies appropriately defined, organizations can align

their recruiting, performance management, training and development and reward practices to

build and reinforce key valued behaviors.

How to Achieve Results - Set Goals and Objectives

A survey of small business owners by Staples found that more than 80% don’t track their

business goals. Not surprisingly, the survey also revealed that 77% of leaders have not achieved

their company vision either.

Those two points highlight an important, but not surprising, relationship between goals and

results. To be successful and accomplish something worthwhile, you have to follow a plan. And

when you’re referring to workplace and business success, it’s not just about you setting and

working towards goals – it’s about your employees doing those things too. That’s why it’s so

important to set goals that your employees can and want to achieve.

Research over the years has revealed a variety of steps for actually achieving goals, such as

ensuring your goals meet the SMART-goal standard. But, in the unique case of setting goals for a

company that will involve multiple participants, there are a few steps that warrant extra

attention, such as involving others in the goal-setting process. In “The Wall Street Journal Guide

to Management” author Alan Murray states, “You must make sure the goals you set for your

team align with those of the broader organization. And you must make sure that your team

understands, accepts and commits to those goals. The more you can involve your employees in

setting goals for themselves and the group, the more committed to those goals they are likely to

be.”

And, while easier said than done, it’s also important that you find the right balance between a

stretch goal and an unachievable one. As The Wall Street Journal’s guide points out, “Goals

should give your team something to reach for. But they should not be unreachable, and their

attainment or lack of attainment should not be dependent on a host of circumstances beyond

the person’s control.”

Tying it all Together

Finally, as part of any new performance management system, you need to tie competencies,

goals and their desired results to something employees really care about. You have to answer

the “What’s in it for me?” question before you can earn their true buy-in to a new system, which

means you need to know what’s important to your employees.


Employee Performance Management System Model – ©2013 Talent Management LLC

According to a recent Globoforce/SHRM study, 71% of survey respondents said that

“Appreciation by a direct supervisor” had the greatest impact on employee engagement, with

“Opportunity to advance” coming in at 41% and “Salary and Bonus” bringing up the rear at 36%.

McKinsey and Company found similar results with appreciation, recognition and special projects

all having a greater impact on employee performance than money alone.

To compliment these efforts, reward and incentive programs designed to: (a) promote or

encourage specific actions by a specific audience and (b) produce measurable outcomes are

gaining speed. More than half of America's companies now are using these programs, spending

over $100 billion annually on them.

In fact, this industry has more than doubled in the last 10 years, with incentives (other than

cash) becoming a $46 billion industry alone.

Conclusion

A company is only as good as its employees, so it’s logical that transforming a process designed

in the 1950s and tweaked over the last 60 years is ready for an overhaul. Here are four ideas to

consider:

1. Change the conversation to improving job-specific competencies and linking those to results vs. “do you work hard” or “do you show up on time”.

2. Performance management should be continuous – a process not an event. This requires that managers become engaged in coaching and developing employees continuously not annually, and that there are process steps included so they stay engaged. We call it “human tithing”.

3. Gathering feedback from others is important, so make sure you incorporate 360s or other feedback gathering into the process.

4. Disconnect pay increases from the performance management conversation. Instead focus on the answers to the, “What’s in it for me?” question.


Sources

Ladan Nikravan, It’s Not Just About Performance: Time to Think Differently, (Talent Management

Magazine, 9/12/13)

Jim Intagliata, Dave Ulrich, and Norm Smallwood, Leveraging Leadership Competencies to

Produce Leadership Brand: Creating Distinctiveness by Focusing on Strategy and Results,

(Published in Human Resources Planning, Winter, 2000, Volume 23.4, pp. 12-23)

Ashley Turley, Setting Goals Your Employees Can and Want to Achieve in 2014. (Refresh

Leadership, 2013 Express Services, Inc., 10/1/2013)

Author Bio

Jackie Messersmith, President and Founding Partner, co-founded Talent Management LLC in

2006. Success as a consultant and business owner has resulted from her dedicated commitment

to the vision and mission of Talent Management to design comprehensive talent management

solutions.

Jackie has effectively led many projects – from local governments to large multi-divisional

organizations – and has an appreciation for the intense diversity of modern day organizations.

Her career has been devoted to increasing profitability, productivity, workforce satisfaction and

ultimately growth for clients. She developed a 5-step process improvement system IDEAS…for

change, utilizing practices from Lean, Six Sigma, Baldrige, and TQM, to ensure the promised

results become a reality, not just another report on the shelf.

Her common sense approach guides her efforts in partnering with clients, understanding

organizational culture and structure, utilizing a solid methodology to improve business

operations, implementing accountability and tracking mechanisms, and striving for continuing

innovation to advance her methods for examining organizational dynamics.

Jackie has served as an examiner for the Small Business of the Year awards, and has spoken at a

NCA Higher Learning Conference in Chicago and the Association for Health Care Administrators

in Columbus. Jackie conducted a one-day pre-conference workshop entitled “Work...Force,

Place and Flow” featuring IDEAS...for change, at the Ohio Partnership for Excellence Quest for

Success annual conference. She also has participated in a panel discussion of the Leadership

Forum, “The Straight & Narrow: Upholding Business Ethics in a Work-A-Day World.” Recently,

she presented, “You had me at Hello…Now it’s time to Grow” at the 2013 Quest for Success

annual conference.

Jackie’s work has been featured in Total Quality: Management, Organization, and Strategy, by

Dr. James Evans, University of Cincinnati. She co-authored a simple guide to relocating

companies entitled, Move Solutions. Her article entitled, “Bringing people, processes and the

workplace together for high performing work environments” has appeared in an issue of the

International Facility Management Journal and The Journal of Leadership and Management in

Engineering. Additionally, The Cincinnati Business Courier has published her article entitled,

“New Wave of Thinking of Business Processes.”

Change the performance management conversation

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